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(CNBC) More office space is being removed than added for the first time in at least 25 years

Chomsky

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(CNBC) More office space is being removed than added for the first time in at least 25 years
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More office space is set to be removed than added this year, shrinking the overall office footprint.
Office vacancies soared to a record high and still hover right around there at 19%.
Developers also have another 85 million square feet of office space being readied for conversion in the next few years.
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While this might otherwise seem like financial or real-estate news, I think it has far further implications. We have reached an epochal inflection point:

"We have gone from adding physical office space, to removing it"

I see this as a huge deal, and yet another example of how technology is reshaping society.

I noted this effect during the pandemic, and proclaimed:

"Many business orgs will realize there's no need for much of the added expense of having a physical office building for their employees"

My proclamation seems to have had at least some truth in it.

Now the good part: We can put those unused spaces to good use providing housing! This has been happening in my city for decades, first with the repurposing of industrial spaces (remember when everyone wanted a loft?), and now with the repurposing of office spaces.

There is one unfortunate aspect, though. The repurposing in my city tends to predominately result in higher-end housing. Not always stratospherically high priced - though it often enough is. But at minimal. the repurposed spaces are priced to the higher end of the market - or at least not the lower end.

As for my self, I'm happy to see so many of us enjoying the benefits of working at home. The quality of life improvements are fantastic, as well as the time savings and efficiency improvements. Ditto for the environmental improvement too (no commuting pollution!).

But a piece of me misses the excitement of being able to "go downtown", and be in a vibrant economic epicenter hub. That former epicenter, in my city at least, is becoming distributed.
 
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Good trend but will be painful in terms of local businesses/services and taxes. Covid gave it a good jumpstart.

Gradual is better, so that municipalities, businesses, restaurants, landlords, etc can adapt.
 
(CNBC) More office space is being removed than added for the first time in at least 25 years
--



--
While this might otherwise seem like financial or real-estate news, I think it has far further implications. We have reached an epochal inflection point:

"We have gone from adding physical office space, to removing it"

I see this as a huge deal, and yet another example of how technology is reshaping society.

I noted this effect during the pandemic, and proclaimed:

"Many business orgs will realize there's no need for much of the added expense of having a physical office building for their employees"

My proclamation seems to have had at least some truth in it.

Now the good part: We can put those unused spaces to good use providing housing! This has been happening in my city for decades, first with the repurposing of industrial spaces (remember when everyone wanted a loft?), and now with the repurposing of office spaces.

There is one unfortunate aspect, though. The repurposing in my city tends to predominately result in higher-end housing. Not always stratospherically high priced - though it often enough is. But at minimal. the repurposed spaces are priced to the higher end of the market - or at least not the lower end.

As for my self, I'm happy to see so many of us enjoying the benefits of working at home. The quality of life improvements are fantastic, as well as the time savings and efficiency improvements. Ditto for the environmental improvement too (no commuting pollution!).

But a piece of me misses the excitement of being able to "go downtown", and be in a vibrant economic epicenter hub. That former epicenter, in my city at least, is becoming distributed.
That is very interesting - and not surprising. It's an example of how Covid changed the world - accelerating a trend that had alread started.

Our IT division went overnight from remote one day a week + as needed (for severe weather, illness, etc), to fully remote. We discovered that we could provide better support to our business partners, with a lot more flexibility for downtimes and special projects. We eventually moved officially to a 'hybrid' model, with in person 'team days' one day a week, and as needed for special projects. Again, this gives us flexibility as we can use shared 'hotel' space in buildings we own, or onsite where our business partners are.

We signed a ten year lease starting coincidentally after spring break when the lockdowns occurred. We never moved in, and haven't been able to get rid of the space. Most of the building we own has been converted into 'hotel' space with monitors and docking stations that can be 'checked out' by anyone who needs it.

Much of our industry has changed - discovering that you don't have to have your staff 'onsite' - and it actually opens up a big pool of workers in other cities and states without having to relocate them.
 
Good trend but will be painful in terms of local businesses/services and taxes. Covid gave it a good jumpstart.

Gradual is better, so that municipalities, businesses, restaurants, landlords, etc can adapt.

Since by its very nature this transition is occurring over time, local businesses and services will transition as well.

Remember - all those new residents newly residing in these former business areas will require plenty of services, themselves.

As to taxes, the new residents will be paying taxes in lieu of the former businesses'.

Between commercial & residential, I don't know which tax base provides higher municipal revenue. But from the way my city is embracing conversion from commercial to residential, I suspect residential taxes will not be deficient!
 
(CNBC) More office space is being removed than added for the first time in at least 25 years
--



--
While this might otherwise seem like financial or real-estate news, I think it has far further implications. We have reached an epochal inflection point:

"We have gone from adding physical office space, to removing it"

I see this as a huge deal, and yet another example of how technology is reshaping society.

I noted this effect during the pandemic, and proclaimed:

"Many business orgs will realize there's no need for much of the added expense of having a physical office building for their employees"

My proclamation seems to have had at least some truth in it.

Now the good part: We can put those unused spaces to good use providing housing! This has been happening in my city for decades, first with the repurposing of industrial spaces (remember when everyone wanted a loft?), and now with the repurposing of office spaces.

There is one unfortunate aspect, though. The repurposing in my city tends to predominately result in higher-end housing. Not always stratospherically high priced - though it often enough is. But at minimal. the repurposed spaces are priced to the higher end of the market - or at least not the lower end.

As for my self, I'm happy to see so many of us enjoying the benefits of working at home. The quality of life improvements are fantastic, as well as the time savings and efficiency improvements. Ditto for the environmental improvement too (no commuting pollution!).

But a piece of me misses the excitement of being able to "go downtown", and be in a vibrant economic epicenter hub. That former epicenter, in my city at least, is becoming distributed.
We have a family member in tech that has worked remote for years, he is looking to change jobs and he is surprised that most require him to be on site, at least part of the time.
I definitely feel there is an overabundance of empty office space but I also feel like in-person requirements are trending back up.
 
Good news! Less competition for housing is ****ing awesome!
 
I think that if a business can do it, they will more and more lean towards off-site employment. Dropping costs for buildings and maintenance can be huge, and with tech today on-site jobs are not always necessary. Probably need to maintain some level of office space as meetings and such may need to be on-site. Certain industries can't do a lot of WFH employment, but I can see how it could be beneficial for companies to move more towards this model.
 
Since by its very nature this transition is occurring over time, local businesses and services will transition as well.

Remember - all those new residents newly residing in these former business areas will require plenty of services, themselves.

As to taxes, the new residents will be paying taxes in lieu of the former businesses'.

Between commercial & residential, I don't know which tax base provides higher municipal revenue. But from the way my city is embracing conversion from commercial to residential, I suspect residential taxes will not be deficient!

Mine is not embracing it. Amazon, other tech companies, bought and lease big-time in Seattle. Microsoft mostly leases in Seattle but the Gates Foundation is there.

Bellevue is across the lake and is also a "city" where these companies have major real estate investments. All these tax $$ add up and the cities are suffering deficits. Because the businesses supporting them...restaurants, services, etc have lost major $$ due to working from home.

So fewer leases, fewer businesses surviving...huge tax losses. Adaptation must occur. We've been investing and expanding our light rail in a big way and now that also plays a factor in giving people more choices. My hope is for more affordable residential "neighborhood" growth and neighborhood businesses to support them. More walkable, as well. This works well in Europe. Much less emphasis on private cars. Seattle's internal public transportation is quite good.

The threats from Amazon, etc to return to office will only be temporary tho...young workers, choosing their career paths now, will decide where they want to work...home, remote, hybrid...and choose their careers based on that as well as other "benefits." WFH is now an established benefit.
 
It is amazing how Covid totally upended the entire work place model but I think the genie is out of the bottle. My daughter has a dynamite job with a large Canadian bank. She has enjoyed working from home, with one day downtown, for almost 5 years. It is 1 1/2 hour commute each way when she has to go downtown. The company owns 2 skyscrapers in downtown Toronto that are only 1/2 full. The writing is on the wall that they will be looking to have employees in the office at least 4 days a week this Fall. If so ,she has decided to find work elsewhere. She has a 4 year old and a 7 year old and a wonderful balance of work and home, both at which she exels, but she is willing to walk away from a very lucrative salary rather than give up those 3 plus hours a day with her kids and husband. Covid showed them a different way of living and setting priorities...as I say the genie is out of the bottle. It is employers who will have to adjust.
 
Good trend but will be painful in terms of local businesses/services and taxes. Covid gave it a good jumpstart.

Gradual is better, so that municipalities, businesses, restaurants, landlords, etc can adapt.
I think it has been a big shock to the commercial real estate market, but at the same time a major benefit to many businesses. It not only gives a lot of flexibility, but also added redundancy. We went through a major hurricane and were able to provide even better support in terms of having people available.

For example, our primary data center, with all of it's redundancies, was cut off. An electrical fire cut off the dedicated 'failsafe' fiber optic lines. The primary and backup internet providers suffered outages to their local data hubs. Yet we were able to work with backup data centers, and internet connections in other cities. And our most reliable employees ended up being those out of state who weren't personally affected by the local disaster.

Plus we've opened up whole markets of employees who aren't local, and have many happy local employees who either don't have to commute every day, or can live further out knowing they only have to commute one day a week.
 
That is very interesting - and not surprising. It's an example of how Covid changed the world - accelerating a trend that had alread started.

Our IT division went overnight from remote one day a week + as needed (for severe weather, illness, etc), to fully remote. We discovered that we could provide better support to our business partners, with a lot more flexibility for downtimes and special projects. We eventually moved officially to a 'hybrid' model, with in person 'team days' one day a week, and as needed for special projects. Again, this gives us flexibility as we can use shared 'hotel' space in buildings we own, or onsite where our business partners are.

We signed a ten year lease starting coincidentally after spring break when the lockdowns occurred. We never moved in, and haven't been able to get rid of the space. Most of the building we own has been converted into 'hotel' space with monitors and docking stations that can be 'checked out' by anyone who needs it.

Much of our industry has changed - discovering that you don't have to have your staff 'onsite' - and it actually opens up a big pool of workers in other cities and states without having to relocate them.

Thanks for your "on the ground" testament.

However, I'm going to argue "Covid changed the world" is not inclusive.

The trends were occurring for decades. My former corp was doing telecommuting & hybrid since the late nineties. In fact, in my department hybrid became the default ca. '98 or '99.

What I will acquiesce to, is the pandemic brought it all home - and accelerated the trend. We knew where we were going, but Covid showed us one & all how real it was!

It's simple economics. It's cheaper to not have to house (office?) an employee!
 
We have a family member in tech that has worked remote for years, he is looking to change jobs and he is surprised that most require him to be on site, at least part of the time.
I definitely feel there is an overabundance of empty office space
but I also feel like in-person requirements are trending back up.

I suspect - but don't know - that there recently has been a slight trend back up - in the larger trend down.

In other words, the overall trend is downward, despite the current blip up.
 
Thanks for your "on the ground" testament.

However, I'm going to argue "Covid changed the world" is not inclusive.

The trends were occurring for decades. My former corp was doing telecommuting & hybrid since the late nineties. In fact, in my department hybrid became the default ca. '98 or '99.

What I will acquiesce to, is the pandemic brought it all home - and accelerated the trend. We knew where we were going, but Covid showed us one & all how real it was!

It's simple economics. It's cheaper to not have to house (office?) an employee!
Sure, telecommuting and hybrid models existed, and were slowly growing. But it was limited. Most businesses had employees onsite. As I noted, even ours allowed employees to do it one day a week or 'more if needed, but they weren't making the leap.

Covid accelerated this - but in many ways 'flipped the switch' for many companies. It even accelerated the technology. For example, we had 'zoom'. But there's no comparison to what Microsoft Teams and other technologies now allow.
 
Thanks for your "on the ground" testament.

However, I'm going to argue "Covid changed the world" is not inclusive.

The trends were occurring for decades. My former corp was doing telecommuting & hybrid since the late nineties. In fact, in my department hybrid became the default ca. '98 or '99.

What I will acquiesce to, is the pandemic brought it all home - and accelerated the trend. We knew where we were going, but Covid showed us one & all how real it was!

It's simple economics. It's cheaper to not have to house (office?) an employee!

The trends were and big tech, like Microsoft, were "talking about remote work" and creating all the tools and infrastructure needed for it for years, decades like you wrote. However they werent putting their $$ where their mouths were. They were not loosening the reins on workers. It was pretty hypocritical. It was veeeeeeeeeerrrrrrrrrrrrrryyyyy gradual and on a case-by-case basis or on a team basis where it was "unofficial."

I actually bought my rural property based on that happening and it happened WAY slower than I hoped.

Covid was the trigger, it broke the dam.
 
Mine is not embracing it. Amazon, other tech companies, bought and lease big-time in Seattle. Microsoft mostly leases in Seattle but the Gates Foundation is there.

Bellevue is across the lake and is also a "city" where these companies have major real estate investments. All these tax $$ add up and the cities are suffering deficits. Because the businesses supporting them...restaurants, services, etc have lost major $$ due to working from home.

So fewer leases, fewer businesses surviving...huge tax losses. Adaptation must occur.

That's a fair rebuttal. I actually considered this possibility as I was finishing my post.

Thanks.

We've been investing and expanding our light rail in a big way and now that also plays a factor in giving people more choices. My hope is for more affordable residential "neighborhood" growth and neighborhood businesses to support them. More walkable, as well. This works well in Europe. Much less emphasis on private cars. Seattle's internal public transportation is quite good.

This model you've described indeed works well. At least in cities large enough to have the critical mass to allow it to work. It's never going to work in a smaller town, obviously.

But my very large city has this "neighborhood" effect and public transportation infrastructure. And now there's ride share, which also enables one to function well "carless".

In fact, in many of my city's neighborhoods cars are seen as a liability. Especially for the younger generations. They just hop on a Divvy Bike or summon a Rideshare.

The threats from Amazon, etc to return to office will only be temporary tho...young workers, choosing their career paths now, will decide where they want to work...home, remote, hybrid...and choose their careers based on that as well as other "benefits.
WFH is now an established benefit.

Well said. I agree.
 
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Sure, telecommuting and hybrid models existed, and were slowly growing. But it was limited. Most businesses had employees onsite. As I noted, even ours allowed employees to do it one day a week or 'more if needed, but they weren't making the leap.

Covid accelerated this - but in many ways 'flipped the switch' for many companies. It even accelerated the technology. For example, we had 'zoom'.
But there's no comparison to what Microsoft Teams and other technologies now allow.

That's a fair point.
 
I suspect - but don't know - that there recently has been a slight trend back up - in the larger trend down.

In other words, the overall trend is downward, despite the current blip up.

There has been. But as previously written by myself and others...it wont last. It's way more costly...the companies right now tho have to justify the real estate they invested millions in. Like Amazon's showplace in DT Seattle. And the Gates Foundation green campus headquarters right next to the Space Needle.

MS also invested shitloads in buildings in Redmond...after years where Redmond wouldnt let them buy and build more, and would only allow MS to rent office space in existing Redmond infrastructure...Redmond finally lifted most restrictions and MS bought many of those office satellites and bought and built more of its own, including huge contributions to financing light rail, it's own light rail stations, massive parking, and at least 2 highway overpasses and service roads. Enormous investment in a vehicle shuttle fleet. The big dream at MS was building a monorail. 😀

And then covid and the buildings were empty. It had to be incredibly frustrating. Esp. since back in the early 2000s MS was behind the online curve investing in web-based apps and services. Huge $$$$$$ invested in infrastructure. A lot of pride too. And some new leadership with their backwards...and misogynistic...opinions on workforces. 🤷
 
The trends were and big tech, like Microsoft, were "talking about remote work" and creating all the tools and infrastructure needed for it for years, decades like you wrote. However they werent putting their $$ where their mouths were. They were not loosening the reins on workers. It was pretty hypocritical. It was veeeeeeeeeerrrrrrrrrrrrrryyyyy gradual and on a case-by-case basis or on a team basis where it was "unofficial."

Perhaps you're right in general.

But there were orgs embracing this since the late nineties. Mine was one. And it was back then an industry-leader common-name Fortune 50 multi-national.

But it could only easily apply this to certain departments, like System Engineering and Software Development. However hybrid was the default HR mandated arrangement, unless a case was made for either pure telecommuting or total in-office required.

I actually bought my rural property based on that happening and it happened WAY slower than I hoped.

Covid was the trigger, it broke the dam.

Wow! I'm impressed, Lursa. You're living my dream!
 
Forced commuting is stupid if one can do parts of their job just as well from a home office.
 
That's a fair rebuttal. I actually considered this possibility as I was finishing my post.

Thanks.



This model you've described indeed works well. At least in cities large enough to have the critical mass to allow it to work. It's never going to work in a smaller town, unfortunately.

But my very large city has this "neighborhood" effect and public transportation infrastructure. And now there's ride share, which also enables one to function well "carless".

In fact, in many of my city's neighborhoods cars are seen as a liability. Especially for the younger generations. They just hop on a Divvy Bike or summon a Rideshare.




Well said. I agree.

It should work great for smaller cities, even towns. Lightrail, limited private vehicle traffic, continued reliable public transportation, neighborhood businesses accommodating residential and local business & services workers. More (affordable) residential properties, ala condos and apts, also more like Europe. Less spread. Europeans bike and walk a lot. Would be great for the US.
 
There has been. But as previously written by myself and others...it wont last. It's way more costly...the companies right now tho have to justify the real estate they invested millions in. Like Amazon's showplace in DT Seattle. And the Gates Foundation green campus headquarters right next to the Space Needle.

MS also invested shitloads in buildings in Redmond...after years where Redmond wouldnt let them buy and build more, and would only allow MS to rent office space in existing Redmond infrastructure...Redmond finally lifted most restrictions and MS bought many of those office satellites and bought and built more of its own, including huge contributions to financing light rail, it's own light rail stations, massive parking, and at least 2 highway overpasses and service roads. Enormous investment in a vehicle shuttle fleet. The big dream at MS was building a monorail. 😀

And then covid and the buildings were empty. It had to be incredibly frustrating. Esp. since back in the early 2000s MS was behind the online curve investing in web-based apps and services. Huge $$$$$$ invested in infrastructure. A lot of pride too. And some new leadership with their backwards...and misogynistic...opinions on workforces. 🤷

Thanks for sharing this.

I often hear of these stories in general, but have no personal specific experience in them.

My fear in your described situation, is:

"Did MS get tons of tax incentives and provided infrastructure? If so, this could be a boondoggle!"

Remember Foxconn?

Then:

1920px-Foxconn_groundbreaking_2018-06-28_%28cropped%29.jpg


Now:

4011.jpg
 
It should work great for smaller cities, even towns. Lightrail, limited private vehicle traffic, continued reliable public transportation, neighborhood businesses accommodating residential and local business & services workers. More (affordable) residential properties, ala condos and apts, also more like Europe. Less spread. Europeans bike and walk a lot. Would be great for the US.
Absolutely. A great benefit for many. For most people, proximity to work and/or commute has been the driving factor on where to live. Now, more people have the ability to live where they want.

I'm looking forward to our 'next home' (after kids leave) in a nice, smaller, town further out, closer to family. Even a longer commute isn't that big of a deal if you are only doing it one day a week.
 
It should work great for smaller cities, even towns. Lightrail, limited private vehicle traffic, continued reliable public transportation, neighborhood businesses accommodating residential and local business & services workers. More (affordable) residential properties, ala condos and apts, also more like Europe. Less spread. Europeans bike and walk a lot. Would be great for the US.

I disagree. At least in part.

Small towns don't have the critical mass to allow public transport to be affordable. That's why we don't see it. Unless perhaps in instances where there are small municipalities that are part of a larger metro center. That's the case in my large metro area. But then those "small towns" are actually "suburbs" - which was not the jurisdictions I was referring to.

By "small towns", I meant "rural small towns". I could have been clearer.
 
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Absolutely. A great benefit for many. For most people, proximity to work and/or commute has been the driving factor on where to live. Now, more people have the ability to live where they want.

I'm looking forward to our 'next home' (after kids leave) in a nice, smaller, town further out, closer to family. Even a longer commute isn't that big of a deal if you are only doing it one day a week.

I'm at a loss here how it can be assumed public transport will work in small towns, specifically those that are not part of a larger metro area where they are in effect suburbs?

How is it possible, economically? I don't see it.
 
I disagree. At least in part.

Small towns don't have the critical mass to allow public transport to be affordable. That's why we don't see it. Unless perhaps in instances where there are small municipalities that are part of a larger metro center. That's the case in my large metro area. But then those "small towns" are actually "suburbs" - which was not the jurisdictions I was referring to.

By "small towns", I meant "rural small towns". I could have been clearer.

I'm referring to suburban towns not rural.
 
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